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US: Constellation sees sales slip, profits rise in H1

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  • Six-month sales down to US$1.67bn
  • Half-year net profits hit $106.2m
  • Debt decreased by $270m year-to-date
  • Reaffirms full-year diluted EPS and free cash flow guidance

Constellation Brands has posted a dip in sales but a healthy rise in profits for its fiscal first-half.

The wine giant, which also operates in the beer and spirits sectors, said today (1 October) that net sales in the six months to the end of August slid to US$1.67bn, down from $1.88bn.

Net profits, however, leapt to $106.2m from $21.9m a year earlier, thanks in part to US shipment growth,
savings from cost reduction efforts and the overlap of foreign currency losses from the prior year second quarter in its wine segment.

Operating profits almost doubled to $221.7m from $112.2m.

For the three-months to the end of August, sales were down to $876.8m from $956.5m, with the year earlier's net loss of $22.7m turned into a net profit of $99.7m. Operating profits soared to $138.6m versus $21.5m.

"Our performance in the second quarter demonstrates that we are on track to achieve our full-year goals," said Constellation's president and CEO, Rob Sands. "We are focused on driving organic growth, building must-have brands that return the greatest profits and creating efficiencies for long-term sustainable growth.

"Our initiative to consolidate distribution in the US is nearly complete and we anticipate that this effort will be a major catalyst for future organic brand growth."

Company CFO Bob Ryder added: "We are pleased with the progress made in our global cost reduction efforts and the continuing drive to increase sustainable free cash flow and pay down debt. Our deleveraging efforts are progressing well as debt decreased by more than $155m during the second quarter and more than $1bn since the beginning of fiscal 2009."

For the full announcement, click here.

To read about Constellation's Q1 performance, click here.

An update from Constellation's results conference call appears here.


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